OBJECTIVES: To explore medical expenditure and its impact for people with diabetes covered by Urban Employee Basic Medical Insurance for Hebei Provincial Institutes (UEBMIHPI). METHODS: People diagnosed with “diabetes” were identified from UEBMIHPI claims database during Dec 30^th, 2010 and Dec 25^th, 2011. The Sum_All Medical method was used for expenditure estimation. Descriptive analyses were conducted using EXCEL 2010. RESULTS: During Dec 30^th, 2010 and Dec 25^th, 2011, the UEBMIHPI database recorded claims data of 110256 patients, including 7944 with diabetes (7.21% of all patients), among which 7421 had outpatient records (7.24% of all outpatients) and 2964 had inpatient records (12.16% of all inpatients). 63.28% were male and 79.51% were 50 years of age or older. Mean number of outpatient visits was 14.04 for people with diabetes, in comparison with 4.12 for outpatient with other diseases. Outpatient treatment cost was CNY 9332.52/person and CNY 724.99/visit, of which 30.59% were out-of-pocket money. For those who had used inpatient services, annual inpatient admissions were 1.67 times/person and the cost was CNY 23494.63/person and CNY 14109.20/hospital stay. Over 60% hospitalizations happened in tertiary hospitals. People with diabetes consumed 21.59% (CNY 139million) of total medical expenditure. Only CNY 21 million (15.42%) was spent on anti-glycaemic treatments, the cost of OAD, insulin, insulin pump and Chinese traditional drugs accounted for 52.27%, 40.75%, 2.62% and 4.36% respectively. People with diabetes who received diagnoses or treatments for diabetic complications consumed more healthcare resources (physician visit, medical expenditure/person and medical expenditure/visit) than others. CONCLUSIONS: As one of the major chronic diseases, diabetes consumed great healthcare resources in Hebei. Majority of direct medical expenditures were spent on treating diabetes-related diseases. Perhaps to reduce risks of diabetes complications by promoting early diagnosis, early treatment, rational drug utilization and disease control is the way to save healthcare and social resources.